India is the sixth largest market for Coca-Cola worldwide; it has jumped from being number 19 in 2006 to the sixth spot in a decade and Venkatesh Kini, President, Coca-Cola India, wants to break into the top five markets for Coke worldwide by 2020, if not sooner.
Kini, who was in Chennai recently to address students of various city colleges at the renowned Loyola College, spoke to BusinessLine on the innovations coming out of Coca-Cola in India and on the market for carbonated soft drinks. Edited excerpts:
What are the innovations coming out of Coca-Cola India that are finding their way into the market?
One innovation has been on how we make our products — we have reduced water consumption in our plants and now consume 40 per cent less water than we did five years ago. We have been innovating on the equipment we place in the market.
We have placed over 1,000 solar-powered coolers in many villages. These have gone to women shop-keepers in small villages and the lady retailer’s store has developed a lot. This is because often, she’s the only person in the village who can store products to chill.
We launched a Splash bar, developed by our bottling company Hindustan Coca-Cola, which is a simple fountain machine that uses two-litre bottles to dispense drinks. It’s an affordable fountain that we place in small shops and they can sell a small cup of Coke at ₹5. There’s enough profit for a small retailer as he doesn’t have to buy a big fountain, and can dispense through two-litre bottles. It’s designed and made in India, and we hope it will go global, soon.
Coke has now ventured into the flavoured milk category with Vio? Why?
Vio was developed for us by our R&D Centre and we have launched it in two flavours — kesar pista and badam. It has been launched through Reliance Retail.
We are not getting into the milk business by launching paneer and such, but are making milk products more enjoyable for the youth of today. Our strength is in distribution and marketing, and we bring that to the flavoured milk category.
We think we can add value to the milk market and have tied up with the Dynamix Dairy in Pune, which produces to our specifications. Coke has developed this brand globally, but it has not yet been launched in many countries.
How is Coke contributing to the ‘Make in India’ story?
The Coke you drink in 60 countries has been packaged in PET made in India.
Our global R&D and our partner, India Glycols, together found a way to produce PET from the waste that comes out of processing sugarcane — from the molasses — and make PET chips, which are then sent to our partners around the world to convert into PET bottles.
These bottles are then used to bottle Coke and water. It’s a ‘plant’ bottle.
They already export ₹400 crore worth of PET chips and it’s an inspired, global innovation from India.
What is the forthcoming summer season going to be like for soft drinks?
Last year, we’ve had a slow summer and that dampened our industry for the year. That was because of unseasonal rains and we had to take up prices due to taxes that reduced consumer demand. Rural demand has not picked up yet. We are seeing a sequential improvement in performance.
Rural demand is suppressed because of two successful droughts, so that’s an area of concern for us.
On the other hand, urban demand is getting stronger, but the pace isn’t sufficient to compensate for the rural slowdown. We need to have a good monsoon this year, and a good rabi crop, for rural demand to return.
As an industry, we have to manage through unexpected weather patterns; it’s getting to be quite erratic.
Why is it that we do not see too many of the legendary Coke-Pepsi media battles now?
(Laughs) The battles were more the imagination of the media, than a reality. For us, the opportunity in India is huge. There is room for growth for all players, not just Pepsi and us. But with many global players entering the industry, it is good that there are more players investing in the expansion of the category.
As long as we can capture more than a fair share of growth, we are more than happy with consumers being offered more choice and seeing competition flourish. Strong competition forces you to be stronger, makes you faster, better and more accurate.
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